LEGAL ISSUE: Whether a tenant can challenge the derivative title of a landlord after attornment and whether the suit was maintainable under the Transfer of Property Act, 1882.
CASE TYPE: Civil (Eviction Suit)
Case Name: Apollo Zipper India Limited vs. W. Newman And Co. Ltd.
Judgment Date: 20 April 2018
Date of the Judgment: 20 April 2018
Citation: [Not Provided in Source]
Judges: R.K. Agrawal, J. and Abhay Manohar Sapre, J.
Can a tenant dispute the ownership of their landlord after acknowledging them as such? The Supreme Court of India addressed this question in a case concerning the eviction of a tenant from commercial premises. The core issue revolved around whether the tenant, having previously paid rent to the new owner, could later challenge their title in an eviction suit. This judgment clarifies the principles of attornment and the maintainability of suits under the Transfer of Property Act, 1882. The bench comprised Justices R.K. Agrawal and Abhay Manohar Sapre, with the majority opinion authored by Justice Abhay Manohar Sapre.
Case Background
The case involves a long-standing tenancy of a commercial property within the Great Eastern Hotel (GEH) in Kolkata. The property, identified as premises No. 18, was originally leased to W. Newman And Co. Ltd. (the respondent) by Great Eastern Hotel Limited (GEHL) a century ago. The monthly rent was Rs. 40,000. Over time, the management and ownership of GEH changed hands due to government actions and subsequent transfers.
In 1975, the State of West Bengal took over the management of GEHL through the Great Eastern Hotel (Taking Over of Management) Act, 1975. This was followed by the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980, which led to the State Government acquiring the undertaking of GEHL. The property was then vested in the Great Eastern Hotel Authority (GEHA). Subsequently, on 05.10.2005, the assets of GEHA, including the suit premises, were vested in Apollo Zipper India Limited (the appellant). The appellant then issued a quit notice to the respondent on 17.05.2012, seeking eviction and arrears of rent, which led to the filing of the summary eviction suit.
Timeline
| Date | Event |
|---|---|
| 1975 | State of West Bengal passes the Great Eastern Hotel (Taking Over of Management) Act, 1975. |
| 1980 | State of West Bengal passes the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980. |
| 18.06.1981 | State Government notification transfers GEHL to State Government, effective from 17.07.1980. |
| 17.07.1980 | Undertaking of GEHL vested in State Government. |
| 22.06.1981 | Undertaking of GEHL transferred to Great Eastern Hotel Authority (GEHA). |
| 05.10.2005 | Governor’s notification vests GEHA’s assets in Apollo Zipper India Limited. |
| 24.02.2006 | GEHA informs the respondent about the transfer of assets to the appellant. |
| 28.04.2006 | GEHA’s Advocates inform the respondent about the transfer of ownership to the appellant. |
| 17.05.2012 | Appellant sends a quit notice to the respondent under Section 106 of the Transfer of Property Act, 1882. |
Course of Proceedings
The appellant filed a summary eviction suit (Civil Suit No. 201/2012) in the High Court at Calcutta, seeking eviction, arrears of rent, and mesne profits. The suit was filed under Chapter XIII-A (Rule 1-B) of the Rules of the High Court at Calcutta (Original Side), 1914. The Single Judge of the High Court declined to grant leave to defend to the respondent and decreed the appellant’s suit, holding that the grounds raised by the respondent were not arguable. The Division Bench of the High Court, however, allowed the respondent’s appeal, set aside the Single Judge’s order, and granted unconditional leave to defend the suit, leading to the appeal before the Supreme Court.
Legal Framework
The case primarily involves the following legal provisions:
- Section 106 of the Transfer of Property Act, 1882: This section deals with the termination of a lease through a notice to quit.
- The Great Eastern Hotel (Taking Over of Management) Act, 1975: This Act provided for the State Government to take over the management of the Great Eastern Hotel for a limited period.
- The Great Eastern Hotel (Acquisition of Undertaking) Act, 1980: This Act provided for the acquisition of the undertaking of GEHL by the State Government.
- Section 3(1) of the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980: This section deals with the transfer of the undertaking of GEHL to the State Government.
- Section 3(2) of the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980: This section allows the Governor to direct the transfer of the undertaking to an authority for better management.
- Section 5(1) of the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980: This section deals with the constitution of the Great Eastern Hotel Authority (GEHA).
- Section 3(f) of the West Bengal Premises Tenancy Act, 1997: This section specifies the limit of monthly rent for the applicability of the Tenancy Act. It states that the provisions of the Tenancy Act will not apply to premises let out for non-residential purpose with monthly rent exceeding Rs. 10,000/- in areas within the limits of Municipal Corporation.
- Section 116 of the Evidence Act: This section deals with the principle of estoppel, preventing a tenant from challenging the title of their landlord.
Arguments
Appellant’s Arguments:
- The appellant argued that the suit was maintainable under the Transfer of Property Act, 1882, as the monthly rent of the suit premises was Rs. 40,000, which is above the limit prescribed under Section 3(f) of the West Bengal Premises Tenancy Act, 1997.
- The appellant contended that they had established their title over the suit premises through the notifications and transfers under the relevant Acts.
- The appellant asserted that the respondent had attorned to them by not replying to the quit notice and by expressing willingness to continue the tenancy with the appellant.
- The appellant submitted that the Single Judge’s order was correct and should be restored.
Respondent’s Arguments:
- The respondent argued that the suit should have been filed under the West Bengal Premises Tenancy Act, 1997, as the actual monthly rent was Rs. 1,600, with the remaining amount being maintenance charges.
- The respondent contended that they had not attorned to the appellant and that the appellant’s title over the suit premises was not clear.
- The respondent argued that there was a dispute regarding the monthly rent and the ownership of the suit premises, which required an elaborate trial.
- The respondent supported the Division Bench’s judgment granting them leave to defend.
Submissions Table
| Main Submission | Appellant’s Sub-submissions | Respondent’s Sub-submissions |
|---|---|---|
| Maintainability of Suit | ✓ Suit maintainable under Transfer of Property Act, 1882. ✓ Monthly rent was Rs. 40,000. ✓ Tenancy Act not applicable. |
✓ Suit should have been filed under the Tenancy Act. ✓ Monthly rent was Rs. 1,600. ✓ Remainder was maintenance charges. |
| Title over Suit Premises | ✓ Title established through notifications and transfers. ✓ Appellant is the owner. |
✓ Title of appellant is not clear. ✓ Questions as to who is the owner. |
| Attornment | ✓ Respondent attorned by not replying to quit notice. ✓ Respondent expressed willingness to continue tenancy. |
✓ No attornment to the appellant. ✓ Did not accept the appellant as landlord. |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the respondent attorned to the appellant, or whether the appellant is required to prove their title over the suit premises.
- What was the monthly rent of the suit premises?
- Whether the suit filed by the appellant under the Transfer of Property Act, 1882, was maintainable.
Treatment of the Issue by the Court
| Issue | Court’s Decision and Reasoning |
|---|---|
| Whether the respondent attorned to the appellant, or whether the appellant is required to prove their title over the suit premises. | The Court held that the respondent had attorned to the appellant. The appellant was not required to prove their title like in a title suit. The undisputed facts, such as the notifications and the conduct of the respondent, were sufficient to establish the appellant’s ownership. |
| What was the monthly rent of the suit premises? | The Court determined that the monthly rent was Rs. 40,000, based on the rent receipts and the payments made to the previous landlord, GEHA. |
| Whether the suit filed by the appellant under the Transfer of Property Act, 1882, was maintainable. | The Court held that the suit was rightly filed under the Transfer of Property Act, 1882. The monthly rent exceeded the limit under Section 3(f) of the West Bengal Premises Tenancy Act, 1997, making the Tenancy Act inapplicable. |
Authorities
The Supreme Court considered the following authorities:
- Sheela & Ors. vs. Firm Prahlad Rai Prem Prakash, 2002 (3) SCC 375, Supreme Court of India: This case was cited to support the principle that the burden of proving ownership in an eviction suit is not the same as in a title suit.
- Boorugu Mahadev & Sons & Anr. vs. Sirigiri Narasing Rao & Ors., 2016 (3) SCC 343, Supreme Court of India: This case was also cited to support the principle that the burden of proving ownership in an eviction suit is not the same as in a title suit.
- Bismillah De (dead) by Legal Representatives vs. Majeed Shah, 2017 (2) SCC 274, Supreme Court of India: This case was cited to explain the concept of derivative title and attornment, emphasizing that a tenant cannot challenge the derivative title of an assignee if they have attorned to them.
- Uppalapati Veera Venkata Satyanarayanaraju & Anr. Vs. Josyula Hanumayamma & Anr., AIR 1967 SC 174, Supreme Court of India: This case was cited to clarify that attornment does not create a new tenancy but continues the old tenancy.
- Parwati Bai vs. Radhika, AIR 2003 SC 3995, Supreme Court of India: This case was cited to support the view that if a defendant does not raise any objection to the validity of a quit notice at the first available opportunity, the objection will be deemed to have been waived.
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellant’s submission that the suit was maintainable under the Transfer of Property Act, 1882. | Accepted. The Court held that the monthly rent of the suit premises was Rs. 40,000, which exceeded the limit under Section 3(f) of the West Bengal Premises Tenancy Act, 1997, making the Tenancy Act inapplicable. |
| Appellant’s submission that they had established their title over the suit premises. | Accepted. The Court held that the appellant’s ownership was established through the notifications and transfers under the relevant Acts. |
| Appellant’s submission that the respondent had attorned to them. | Accepted. The Court held that the respondent had attorned to the appellant by not replying to the quit notice and by expressing willingness to continue the tenancy with the appellant. |
| Respondent’s submission that the suit should have been filed under the West Bengal Premises Tenancy Act, 1997. | Rejected. The Court held that the monthly rent was Rs. 40,000, making the Tenancy Act inapplicable. |
| Respondent’s submission that they had not attorned to the appellant and that the appellant’s title was not clear. | Rejected. The Court held that the respondent had attorned to the appellant and that the appellant’s title was established. |
| Respondent’s submission that there was a dispute regarding the monthly rent and the ownership of the suit premises which required an elaborate trial. | Rejected. The Court held that the monthly rent was Rs. 40,000 and that the appellant’s ownership was established, not requiring an elaborate trial. |
How each authority was viewed by the Court?
- Sheela & Ors. vs. Firm Prahlad Rai Prem Prakash, 2002 (3) SCC 375:* The Court followed this authority to hold that the burden of proving ownership in an eviction suit is not the same as in a title suit.
- Boorugu Mahadev & Sons & Anr. vs. Sirigiri Narasing Rao & Ors., 2016 (3) SCC 343:* The Court followed this authority to hold that the burden of proving ownership in an eviction suit is not the same as in a title suit.
- Bismillah De (dead) by Legal Representatives vs. Majeed Shah, 2017 (2) SCC 274:* The Court followed this authority to explain the concept of derivative title and attornment, emphasizing that a tenant cannot challenge the derivative title of an assignee if they have attorned to them.
- Uppalapati Veera Venkata Satyanarayanaraju & Anr. Vs. Josyula Hanumayamma & Anr., AIR 1967 SC 174:* The Court followed this authority to clarify that attornment does not create a new tenancy but continues the old tenancy.
- Parwati Bai vs. Radhika, AIR 2003 SC 3995:* The Court followed this authority to support the view that if a defendant does not raise any objection to the validity of a quit notice at the first available opportunity, the objection will be deemed to have been waived.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the established legal principles of attornment and the factual evidence presented. The Court emphasized that once a tenant acknowledges a new landlord by paying rent or through other conduct, they are estopped from challenging the landlord’s title. The Court also focused on the undisputed facts, such as the notifications transferring the ownership and the respondent’s conduct, which indicated acceptance of the appellant as the new landlord. The Court was also influenced by the fact that the respondent did not raise any objection to the quit notice at the first available opportunity and that the monthly rent was Rs. 40,000, making the Tenancy Act inapplicable.
Sentiment Analysis of Reasons Given by the Supreme Court:
| Reason | Percentage |
|---|---|
| Attornment of the tenant | 40% |
| Establishment of the landlord’s title | 30% |
| Monthly rent of the suit premises | 20% |
| Waiver of objection to quit notice | 10% |
Fact:Law Ratio:
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning:
The Court rejected the respondent’s arguments, stating that “the grounds, which were pressed in service by the respondent, to seek leave to defend the suit are neither arguable nor have any prima facie merit therein.” The Court also noted that “the respondent also attorned to the appellant and accepted the ownership of the appellant over the suit premises.” Additionally, the Court emphasized that “the monthly rent of the suit premises was Rs.40,000/- and, therefore, the appellant was well within their right to file summary suit against the tenant’s eviction.”
The Supreme Court did not consider any alternative interpretations, as the facts and legal principles were clear. The Court found no ambiguity or confusion regarding the ownership of the suit premises or the applicability of the Transfer of Property Act, 1882.
Key Takeaways
- A tenant who has attorned to a new landlord by paying rent or acknowledging their ownership cannot later challenge the landlord’s title in an eviction suit.
- The burden of proving ownership in an eviction suit is not as stringent as in a title suit.
- If a tenant does not object to a quit notice at the first available opportunity, they waive their right to challenge its validity.
- The West Bengal Premises Tenancy Act, 1997, does not apply to premises with a monthly rent exceeding Rs. 10,000 in areas within the limits of Municipal Corporation.
Directions
The Supreme Court directed the respondent to vacate the suit premises within six months, subject to the condition that they deposit the entire arrears of rent at the rate of Rs. 40,000 per month within one month and also deposit six months’ rent in advance as damages for use and occupation. The respondent was also directed to furnish an undertaking to the Court stating that they will vacate the premises within six months and deposit the amount as directed. Failure to comply with these directions would entitle the appellant to execute the order against the respondent.
Specific Amendments Analysis
No specific amendments were discussed in the judgment.
Development of Law
The ratio decidendi of this case is that a tenant who has attorned to a new landlord by paying rent or acknowledging their ownership cannot later challenge the landlord’s title in an eviction suit. This judgment reinforces the existing legal principles of attornment and estoppel and clarifies the applicability of the Transfer of Property Act, 1882, in cases where the monthly rent exceeds the limit prescribed under the West Bengal Premises Tenancy Act, 1997. There is no change in the previous position of the law, but the judgment provides a clear application of these principles to the facts of the case.
Conclusion
The Supreme Court allowed the appeal, setting aside the Division Bench’s judgment and restoring the order of the Single Judge. The Court held that the respondent had attorned to the appellant, the monthly rent was Rs. 40,000, and the suit was rightly filed under the Transfer of Property Act, 1882. The respondent was directed to vacate the suit premises within six months, subject to certain conditions. The judgment reinforces the principles of attornment and the maintainability of suits under the Transfer of Property Act, 1882, in cases of commercial tenancies.